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Chris John

Expert

Published on: Sep 17, 2026

Aadhaar Act Amendment

The highest ruling authority in India, the Supreme Court, has reached a landmark decision on the controversial Aadhaar Card and the associated Act implemented in 2016. A 5-member constitution bench of the apex court has upheld certain provisions of the Act, while others requiring biometric authentication were nullified. Although Aadhaar has sparked discussions related to privacy invasion, it has also empowered marginalized sections of society, providing them with a unique identity, which many believe outweighs the disadvantages.

The verdict was delivered by the constitutional bench of the Supreme Court, presided over by CJI Dipak Misra along with Justice A M Khanwilkar, Justice A K Sikri, Justice D Y Chandrachud, and Justice Ashok Bhushan. This article covers the highlights and summary of the ruling concerning the amendment of the Aadhaar Act.

Highlights of the Verdict

  1. Aadhaar Data has been prioritized significantly. The Court has instructed the Centre to implement a stringent law for protecting the data collected via the Aadhaar Card.
  2. Affirming the need for security, the Supreme Court assures the public that security measures are in place to protect the information collected. A new line of defense has been mandated, and the data storage duration in the system must be reduced.
  3. An Aadhaar Card is no longer required for opening a bank account or acquiring a mobile connection.
  4. Aadhaar card is not mandatory for school admissions, and students of CBS, NEET, and UGC are not required to be Aadhaar cardholders for exam appearances.
  5. However, linking the Aadhaar Card to the respective PAN Card remains mandatory for filing Income Tax Returns (ITR).
  6. An Aadhaar card is still necessary for benefiting from welfare schemes and government subsidies, benefiting the poor and marginalized. However, no child should be denied benefits from any scheme regardless of Aadhaar status.
  7. The Court has directed the Central Government to ensure migrants entering the country unofficially are not provided with an Aadhaar Card, to prevent misuse of welfare schemes.
  8. The distinction between an individual's biometric Aadhaar data and personal identity has been clarified; such biometric data cannot be duplicated.
  9. Sharing data under the Aadhaar Act, which poses a national security risk, has been struck down by the Supreme Court.
  10. Services like Employee Pension, mobile re-verification, mutual fund investments, insurance policies, and several other financial accounts no longer require mandatory Aadhaar linkage.
  11. Private firms and online services selling tickets or providing other functionalities cannot demand users' biometric data.
  12. Following a review of the Aadhaar scheme, the Court assures the minimal biometric data collected cannot easily profile individuals.

Effect on Businesses

The Supreme Court decision regarding Aadhaar is anticipated to significantly impact payment banks and FinTech companies, including service providers like e-wallets, instant loan providers, online brokerage houses, and lending platforms. Striking down Section 57 of the Aadhaar Act, which allowed the use of Aadhaar for identity verification for any purpose, will transform the industry practices.

Given the industry norms, companies previously took about 30 minutes to enroll customers using Aadhaar. In contrast, it now takes 5-6 days for conducting a physical KYC verification. This alteration is likely to slow processes for new connections and accounts, increasing customer acquisition costs for companies.

The rapid, paperless systems adopted by telecom and FinTech industry giants face a significant challenge post-verdict. Presently, Aadhaar-linked subscribers number over 500 million, predominantly concentrated in urban areas, representing nearly half of India's total mobile users.

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Frequently Asked Questions

Common questions about Aadhaar Act Amendment.

The Supreme Court amended certain provisions of the Aadhaar Act to strike a balance between the empowerment of marginalized sections and addressing concerns over privacy and data security. The Court kept intact the mandatory use of Aadhaar for welfare schemes and subsidies but struck down its requirement for activities like banking, mobile connections, and school admissions.
Some key highlights include: giving high priority to Aadhaar data protection, making Aadhaar optional for services like banking and mobile connections, retaining its mandatory use for filing IT returns and availing welfare schemes, barring unauthorized immigrants from getting Aadhaar, and prohibiting private companies from demanding biometric data.
The amendment, particularly the striking down of Section 57, will significantly impact companies like payment banks, fintech firms, e-wallets, and online brokerages. They can no longer use Aadhaar for customer verification, which was a quick and paperless process. This may slow down new customer acquisition and increase operational costs for non-Aadhaar based KYC processes.
No, the Supreme Court made an exception for children, ruling that no child should be denied benefits from any welfare scheme or subsidy, regardless of whether they have an Aadhaar card or not.
The Court has directed the Centre to bring a stringent law for protecting Aadhaar data and has ordered additional security measures along with a reduction in the storage period for data. It has also struck down the provision allowing sharing of data, citing national security concerns.
No, the Supreme Court has specifically instructed the Central Government to ensure that unauthorized immigrants or migrants who enter the country illegally are not offered an Aadhaar card, as they may misuse welfare schemes and subsidies.
Yes, one of the provisions upheld by the Supreme Court is the mandatory linking of Aadhaar with PAN (Permanent Account Number) for filing Income Tax Returns.
No, the Supreme Court has clearly stated that private firms cannot demand biometric and other data from their users in exchange for services like online ticket booking, movie tickets, etc.
The Court has assured the public that after reviewing the Aadhaar scheme and structure, it is not an easy task to profile a person based on the minimal biometric data collected through Aadhaar.
No, the Supreme Court has specifically stated that students appearing for exams conducted by bodies like CBSE, NEET, and UGC will not be required to furnish their Aadhaar cards.